Stocks tumbled on the Tokyo Stock Exchange to a 10-month low Thursday, but British shares edged higher and the dollar rose against foreign currencies on overseas markets.
Oil prices edged higher and gold was mixed.
Financial markets in the United States were closed in observance of Thanksgiving, sidelining many overseas players who ordinarily take cues from U.S. activity.
The Paris market was among the main gainers in Europe, notching up a sharp rise on relief that Wall Street closed with only small losses Wednesday following Tuesday's sharp slide.
"A lot of people had expected Wall Street to keep going down, so there was a bit of short-covering on the Bourse," said one French trader.
In Frankfurt, German stocks also endured a dull day with modest gains. The main feature was a 21% drop in the price of Metallgesellschaft shares.
The metals group, which nearly went bankrupt earlier this year, announced capital-raising measures on Wednesday.
Stock traders in Japan said Wednesday's retreat on the New York Stock Exchange led to residual selling pressure in Tokyo on Thursday. Japanese financial markets had closed Wednesday for a national holiday.
The Nikkei average of 225 selected stocks dropped for the fourth straight trading day, falling 261.75 points, or 1.38%, to 18,701.24. On Tuesday, the key index had shed 158.73 points, closing below the psychologically important 19,000-point level for the time since Feb. 18.
Traders traced Tokyo's decline partly to the losses on Wall Street and markets in Europe, Hong Kong and elsewhere.
Stock prices had fallen on Wall Street Wednesday for the fifth straight day as more investors migrated out of stocks and into the Treasury market, attracted by the high yields on bonds.
"Selling pressure from foreign investors helped knock prices down," said Toshiaki Yui, a trader at Nomura Securities, a large Japanese trading house.
Adding to pressure on Tokyo stocks were investors selling Japanese shares to buy dollars following an increase in key U.S. interest rates last week by the Federal Reserve Board.
Share prices closed slightly higher on the London Stock Exchange after steep declines in the previous session. The bellwether Financial Times index of 100 leading shares was up 9.1 points, or 0.3%, at 3,036.6.
Dollar trading against the German mark was little affected after the Bundesbank's policy-forming council voted to leave rates unchanged at its meeting Thursday.
Lower German rates would have made the return on the mark less attractive and typically boosted the dollar. However, few investors expected the German central bank to cut rates since German M3 money supply continues to grow outside the Bundesbank's 4% to 6% target range. The inflation-fighting German central bank uses M3 expansion as a leading indicator of price rises.
The Bundesbank left its discount and Lombard rates unchanged and extended a freeze on its 14-day securities repurchase rate for another two weeks.
In London, the dollar was quoted at 98.45 Japanese yen, up from 98.25 yen late Wednesday.
Dealers said the dollar benefited from a perception that too many investors had sold the U.S. currency in recent days.
Oil prices in London rose slightly. North Sea crude for January delivery edged up a penny to $17.15 a barrel.
In light trading of U.S. Treasury securities in Japan, the price of the benchmark 30-year bond was unchanged and the yield held at 7.94% from the close in New York on Wednesday.
The price of the Japanese government's benchmark 10-year bond finished at 96.69 yen, up 0.32 yen from Tuesday's close. The yield slipped to 4.620% from 4.735%.